Weekly Macro Review

March 13, 2022

Triple Play Review

Potential reversal weeks across the board this week challenging the recent run off the lows.  Weekly candles need follow through as well, so as bad as some may think it looks, we aren’t there yet.  That said, not many seem to be pulling for the bulls as they have a lot of heavy lifting to do. $SPY regained the most, but came right to the underside of the previous range. $QQQ was right there too and trying to negotiate the VPOC and the MA bands. Then we have $IWM which can’t seem to get off the mat as it will keeps getting rejected at its broken range bottom and this week handily rejected by the MA bands. with $IWM right back with its RSI at 40 on big positive is if somehow it holds here and pivots giving the bulls a little footing for another attempt. It was a tough week for all 3 as the FED continues to press.

One the daily level $IWM is definetely leading down, but even here we see RSI remains above 4 and is about to give this nascent bull range shift a hard test as it puts in a deeper retracement of than the other two so far.  $QQQ RSI did break 50 on Friday’s weakness, but the overall retracement is still fairly shallow on price here. Then we have $SPY with the strongest RSI holding over 50 so far and Price trying to hold the 9sma and the MA Bands on this move. Sellers are trying to take the reigns back with distribution days starting to stack back up, so we will see if OpEx provides any relief or if it just drives the bearish message home for now. A lot of caution going into the week, but watching to see who shows up as we are really in no-mans land on this timeframe right here.

the 65min chart is still in RSI brear ranges and was rejected mid-week when it tried to bounce. all pointing down, but once again on this level we are seeing RSI testing 40. That means they all have room to fall more and help the higher time frames confirm, but if they do hold here near 40 and pivot it would not be that surprising to us, but probably catch many off guard. As mentioned above, go into the week with a lot of caution, but keep your eyes wide open in case we do hold the RSI bull ranges on the daily

World and Intermarket

World ETF gainers for the week posted here.  $TUR and $INDA were highlighted a few weeks ago as emerging names and were top performers last week. These leaders are still very heavy oil and commodity producers as one might expect.

Intermarket ETF RS rankings are moving back to an unfavorable positioning for equities as most as back in the lower half of the list. Except the $QQQ which has the highest RS of the equity complex. I bet that would surprise many based on the whippy price action we are seeing. Commodities still on top even with them taking some hits this week. $USO fell 6.24%.  The only two green spots were the dollar $UUP and $IYR as money continues to flow here in a grab for yield that is not tied to bonds which remain anchored to the bottom. These bond moves are unprecedented and will revert at some point and it could get pretty violent catching many offside in the short term. I will be interest to see how that plays out to get a read on how worried the longer term inflation sentiment really is.

Power Universe

The Power Universe equal weight index we produce is still in a RSI bull range, pulling back to test the downtrend that it recently broke. This is fairly normal chart action and if it holds we are likely to see a higher high sooner than later on this move continuing the uptrend we started with the higher lows and higher highs in March. If it fails, we are back to another retest which has a good chance of failing after all the holds early in the year. Failed bounce could give it the momentum it needs to get through that level.

Universe Breadth

This week we separate out the measures we follow by long, intermediate and short term and look at them separately as their message are all slightly different at the moment leaving uncertainty relatively high.

  • Longer Term:
  • NHNL Differential was actually up 20 on Friday putting all 3 signals back on buy here. NHNL is moving back above and below the flatline but did improve enough to pull the 30day average back in the green this week.
  • Advance Decline Line is making lower highs on the longer view, and no real message shorter term as it moves with price here. 
  • %>200sma remains weak as it is back in the 30s after a run over the 50% level.
  • Intermediate:
  • %>50sma is back belwwo 50 as well, but any hold and pivot higher over 40% is a pullback signal we have used in uptrends in the past, It should help tell us if that is what we are actually in or not. 
  • McClellan Summation crossed to a sell signal Friday and is another issue for bulls here
  • Shorter Term:
  • %>20sma is back oto 40% as well after a strong move above 80%
  • McClellan Oscillator is back below zero, but not near any extremes
  • Breadth Thrust back near 40 with no extremes jumping out
  • PMNLC (below) did catch my eye and maybe trying to give a glimmer of opportunity (can’t use hope) as all three levels made slightly less new lows and slightly more highs over the last three sessions as the index lost ground.

The sector rankings only saw a few moves this week worth noting.  We highlighted $IYR in the Intermarket space as a gainer, but our equal weight Real Estate index was down 4% showing it is a selective large cap group of REITs that are performing. It should stand out pretty starkly if you go to the Real Estate page and dig through the RS list at the bottom or jump in the ETF list if you want to see which strategies there are working in this REIT environment. The gainer for the week was Communication Services which we highlighted last week too, but may be worth hitting that link and digging into that space a little more here too. Energy was the only gainer here for the week even though $USO took a hit. Many charts have set up again and are looking for breakouts after a week or two of back and forth.

Overall the markets are trying to roll back over, but are still viable on the daily, but leaking fast. We have OpEx which can add even more volatility to the mix and provide for some wild swings.  Shorter term traders should see some great opportunities while the longer term players need to see buyers show up and take a stand very soon if they want a chance to turn this thing before it gets out of their reach.

I am in Savannah with my family for my son’s Southeast Regional Shotgun tournament, so the Sector Review will likely by early week, but I wanted to get the general market thoughts out anyway to give a quick view of where we are.

We cover all of this and more in the video at the top of the page.  Also look for our Power Sector Review for a closer look under the hood. You can find these and other charts on our Stocktwits and Twitter feed @Power1nvesting and throughout this site. Anything mentioned is for education purposes only and are not meant to be recommendations to buy or sell any securities. Please see the full disclosure in the footer for more information.

As always, I hope this helps!